Citizens Advice has today welcomed the news that BrightHouse has committed to reimburse £14.8 million to 249,000 customers for offering rent-to-own deals on household goods without the proper affordability checks.

Previous research by the charity has found that one in five rent-to-own customers spent 20% or more of their income on payments, and more than half had to take on other debts to cover the costs.

Citizens Advice has called for the FCA to improve affordability checks for rent-to-own customers to prevent people from being offered agreements they can’t afford.

In addition to action to help people when they are in debt, the charity is asking for more protection for people against unaffordable lending. The charity is also asking the payday loan cap to be extended to all forms of high cost credit – meaning that no one would pay more than twice what they borrowed in interest and charges.

Hitesh Patel, Chief Executive of Citizens Advice Halton, said:

“Citizens Advice has long called for the Financial Conduct Authority to take action on poor affordability checks on rent-to-own deals, which can trap people in debt.

“In the last 12 months nationally the Citizens Advice service has helped people with more than 13,000 rent-to-own issues where people were struggling to make repayments for essential goods like fridges and washing machine.

“Last year in Halton, we have helped over 2,000 people who were trapped in a downward spiral of unmanageable debt, and many of these people were struggling with rent-to-own payments.

“Each day we see the damaging effect irresponsible lending can have on local people’s health and wellbeing and so we’re pleased to see that the FCA are taking action against BrightHouse whose loose lending practices have pushed the very people who can least afford it further into financial difficulty.

“Citizens Advice is calling on the FCA to tighten up credit checks across the rent-to-own sector to prevent people getting caught in a debt spiral.”

Anyone who is struggling with debts or is worried about how they might cope financially in the future is urged to contact Citizens Advice Halton’s “money advice team” on 0151 257 2449 or email advice@citizensadvicehalton.org.uk .

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